THIS AGREEMENT is
made effective January 1, 2009 (the “Effective
Date” ), between SANDRIDGE ENERGY, INC., a Delaware
corporation (the “Company” ), and Rodney E.
Johnson, an individual (the “Executive”
).
WHEREAS, the
Company and the Executive desire to set forth the terms of their
agreements relating to the employment of Executive by the Company;
and
NOW, THEREFORE, in
consideration of the mutual promises herein contained, the Company
and the Executive agree as follows:
1. Employment. The Company hereby employs the Executive
and the Executive hereby accepts such employment subject to the
terms and conditions contained in this Agreement. The Executive is
engaged as an employee of the Company and the Executive and the
Company do not intend to create a joint venture, partnership or
other relationship that might impose a fiduciary obligation on the
Executive or the Company in the performance of this Agreement,
other than as an officer of the Company.
2. Executive’s Duties. The Executive is employed
on a full-time basis. Throughout the term of this Agreement, the
Executive will use his/her best efforts and due diligence to assist
the Company in the objective of achieving the most profitable
operation of the Company and the Company’s affiliated
entities consistent with developing and maintaining a quality
business operation. The Executive shall also devote all of
Executive’s working time, attention and energies to the
performance of Executive’s duties and responsibilities under
this Agreement.
2.1 Specific
Duties. During the term of this Agreement, the Executive will
serve as the Executive Vice President — Reservoir Engineering
for the Company. The Executive will perform all of the services
required to fully and faithfully execute the position to which the
Executive is appointed and such other services as may be assigned
by the Company’s Board of Directors in their sole discretion.
In addition, the precise duties to be performed by Executive may be
changed or curtailed in the sole discretion of the Board of
Directors of the Company.
2.2 Rules and
Regulations. From time to time, the Company may issue policies
and procedures applicable to employees and the Executive including
an employment policies manual. The Executive agrees to comply with
such policies and procedures, except to the extent such policies
are inconsistent with this Agreement. Such policies and procedures
may be supplemented, modified, changed or adopted without notice in
the sole discretion of the Company at any time. In the event of a
conflict between such policies and procedures and this Agreement,
this Agreement will control unless compliance
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with this
Agreement will violate any law or regulation applicable to the
Company or its affiliated entities.
3. Other
Activities. The Executive shall not engage in any business
activity that in the judgment of the Board conflicts with the
Executive’s duties hereunder, whether or not such activity is
pursued for gain, profit, or other pecuniary advantage. In
addition, except for the activities permitted under paragraph 3.1
of this Agreement or approved by the Board of Directors in writing,
the Executive will not: (a) engage in activities which require
such substantial services on the part of the Executive that the
Executive is unable to perform the duties assigned to the Executive
in accordance with this Agreement; (b) serve as an officer or
director of any publicly held entity; or (c) directly or
indirectly invest in, participate in or acquire an interest in any
oil and gas business, including, without limitation,
(i) producing oil and gas, (ii) drilling, owning or
operating oil and gas leases or wells, (iii) providing
services or materials to the oil and gas industry,
(iv) marketing or refining oil or gas, or (v) owning any
interest in any corporation, partnership, company or entity which
conducts any of the foregoing activities. The limitations in this
paragraph 3 will not prohibit an investment by the Executive in
publicly traded securities. The Executive is not restricted from
maintaining or making investments, or engaging in other businesses,
enterprises or civic, charitable or public service functions if
such activities, investments, businesses or enterprises do not
result in a violation of clauses (a) through (c) of this
paragraph 3. Notwithstanding the foregoing, the Executive will be
permitted to participate in the activities set forth in
Section 3.1 that will be deemed to be approved by the Company,
if such activities are undertaken in strict compliance with this
Agreement.
3.1 Royalty
Interests and Gifts. The foregoing restriction in clause
(c) will not prohibit the ownership of royalty interests where
the Executive owns or previously owned the surface of the land
covered by the royalty interest and the ownership of the royalty
interest is incidental to the ownership of the surface estate or
the ownership of royalty, overriding royalty or working interests
that are received by gift or inheritance subject to disclosure by
Executive to the Company in writing.
4. Executive’s Compensation. The Company agrees
to compensate the Executive as follows:
4.1 Base
Salary. Executive will be paid a base salary (the
“Base Salary” ) in an annual rate of not less
than Three Hundred Forty-four Thousand Five Hundred Dollars
($344,500.00), which will be paid to the Executive in installments
consistent with the Company’s customary payroll practices,
beginning January 21, 2009, during the term of this
Agreement.
4.2 Bonus.
In addition to the Base Salary described at paragraph 4.1 of this
Agreement, the Company may periodically pay bonus compensation to
the Executive. Any bonus compensation will be paid by separate
check apart from Executive’s Base Salary less appropriate
deductions pursuant to Internal Revenue Service guidelines. In
order to be entitled to the bonus compensation
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set forth
herein and any future bonuses, Executive must be an active
full-time employee of the Company on the date the bonus is to be
paid. Upon notice of intent to separate employment or separation of
employment for any reason prior to the date any bonuses are paid,
Executive shall not be eligible for any pro rata bonus
compensation. Executive recognizes and acknowledges that except as
provided above, the award of bonus is not guaranteed or promised in
any way. Any additional bonus compensation will be at the absolute
discretion of the Company in such amounts and at such times as the
Board of Directors of the Company (or a Compensation Committee
thereof) may determine.
4.3 Equity
Compensation. In addition to the compensation set forth in
paragraphs 4.1 and 4.2 of this Agreement, the Executive may
periodically be granted awards of Company restricted stock under
and subject to the Company’s equity compensation plans (the
“Equity Compensation Plans” ). Such equity
compensation will vest over a four (4) year period which
begins to run from the date of each grant. In order to be entitled
to the award of equity compensation, the Executive must be an
active full-time employee of the Company on the grant date.
Further, the terms and provisions of the Equity Compensation Plans
control and direct the award of Company restricted
stock.
4.4
Benefits. The Company agrees to extend to the Executive
retirement benefits and deferred compensation (if any and if made
available) and reimbursement of reasonable expenditures. The
Company will also provide the Executive the opportunity to apply
for coverage under the Company’s medical, life and disability
plans, if any. If the Executive is accepted for coverage under such
plans, the Company will provide such coverage on the same terms as
is customarily provided by the Company to the plan participants as
modified from time to time. The Executive is subject to all of the
terms and provisions of the Company’s benefit plans or
policies.
4.5 Paid Time
Off. The Executive shall be eligible for thirty (30) days
of Paid Time Off (“PTO”) each continuous year of
employment during the term of this Agreement under the
Company’s PTO policy. Such PTO shall be calculated from the
Executive’s original date of hire. No additional compensation
will be paid for failure to take PTO and no PTO may be carried
forward from one twelve (12) month period to
another.
4.6 Membership
Dues. The Company will reimburse the Executive for:
(a) the monthly dues necessary to maintain a full membership
in a club in the Oklahoma City area selected by the Executive; and
(b) the reasonable cost of any approved business entertainment
at such club. All other costs, including, without implied
limitation, any initiation costs, initial membership costs,
personal use and business entertainment unrelated to the Company
will be the sole obligation of the Executive and the Company will
have no liability with respect to such amounts.
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5. Term. The employment relationship evidenced by this
Agreement is an “at will” employment relationship and
the Company reserves the right to terminate the Executive at any
time with or without cause. In the absence of termination as set
forth in paragraph 6 below, this Agreement will extend for a term
commencing on the Effective Date, and ending on December 31,
2009 (the “Expiration Date” ). Unless the
Company provides thirty (30) days prior written notice of
non-extension to the Executive, on or before the Expiration Date,
the term and the Expiration Date will be automatically extended for
one (1) additional year from the Expiration Date.
6. Termination. This Agreement will continue in effect
until the expiration of the term stated in paragraph 5 of this
Agreement unless earlier terminated pursuant to this paragraph
6.
6.1 Termination by Company. The Company will have the
following rights to terminate Executive’s
employment:
6.1.1
Termination without Cause. The Company may terminate
Executive’s employment without Cause at any time by the
service of written notice of termination to the Executive
specifying an effective date of such termination not sooner than
ten (10) days after the date of such notice (the
“Termination Date” ). In the event the Executive
is terminated without Cause (other than a CC Termination under
paragraph 6.3 of this Agreement), the Executive will receive as
termination compensation a lump sum payment equal to twelve
(12) months Base Salary (as in effect on the Termination
Date). If on the Termination Date, the Executive is a
“specified employee” as defined in regulations under
Section 409A of the Code, such payment will commence on the
first payroll payment date which is more than six months following
the Termination Date. The right to the foregoing termination
compensation set forth above is subject to the Executive’s
execution of the Company’s severance agreement which will
operate as a release of all legally waivable claims against the
Company. Such payment is further conditioned upon the
Executive’s compliance with all of the provisions of this
Agreement, including all post-employment obligations.
6.1.2
Termination for Cause. The Company may terminate the employment
of the Executive hereunder at any time for Cause (as hereinafter
defined) (such a termination being referred to in this Agreement as
a “Termination For Cause”) by giving the Executive
written notice of such termination, which shall take effect
immediately upon the giving of such notice to the Executive. As
used in this Agreement, “Cause” means (A) the
Executive’s material breach or threatened breach of this
Agreement; (B) the Executive fails to substantially perform
the Executive’s duties hereunder; (C) the
misappropriation or fraudulent conduct by the Executive with
respect to the assets or operations of the Company or any of its
subsidiaries or affiliated companies; (D) the
Executive’s willful disregard of the instructions of the
Board or the
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Executive’s material neglect of duties or
failure to act, other than by reason of disability or death;
(E) the Executive’s personal misconduct which
substantially injures the Company; or (F) the conviction of
the Executive for, or a plea of guilty or no contest to, a felony
or any crime involving fraud, theft or dishonesty. In the event
Executive’s employment is terminated for Cause, the company
will not have any obligation to provide any further payments or
benefits to the Executive after the effective date of such
termination.
6.2
Termination by Executive. The Executive may voluntarily
terminate his employment with or without Cause by the service of
written notice of such termination to the Company specifying an
effective date of such termination thirty (30) days after the
date of such notice. The Company may in its sole discretion, elect
to waive all or any part of the 30-day notice period with no
further obligations being owed to the Executive by the Company. In
the event employment is terminated by the Executive, neither the
Company nor the Executive will have any further obligations
hereunder, except for any obligations which expressly survive
termination of employment including Sections 7, 8, 9, 10, 11
,12 and 13.
6.3
Termination After Change in Control. If during the term of this
Agreement there is a “Change of Control” and
within one (1) year thereafter there is a CC Termination (as
hereafter defined), then the Executive will be entitled to a
severance payment (in addition to any other rights and other
amounts payable to the Executive under Section 6.7 or under
Company plans in which Executive is a participant) payable in a
lump sum in cash within 10 days following the CC Termination in an
amount equal to the sum of the following: (a) two
(2) times the Executive’s Base Salary for the last 12
calendar months ending immediately prior to the CC Termination and
bonus paid during such 12 month period pursuant to Section 4.2
(based on the average of the last three years’ annual bonuses
or such lesser number of years as Executive may have been
employed). If the foregoing amount is not paid within ten
(10) days after the CC Termination, the unpaid amount will
bear interest at the per annum rate of 12%. The right to the
foregoing termination compensation under clause (a) above is
subject to the Executive’s execution of the Company’s
severance agreement which will operate as a release of all legally
waivable claims against the Company. Such payment is further
conditioned upon the Executive’s compliance with all of the
provisions of this Agreement, including all post-employment
obligations. Notwithstanding the foregoing, if at the time of a CC
Termination, the Executive is a “specified employee” as
defined in regulations under Section 409A of the Code, such
payment will be made on the first day which is more than six months
following the CC Termination. In connection with any Change of
Control, the Company shall obtain the assumption of this Agreement,
without limitation or reduction, by any successor to the Company or
any parent corporation of the Company.
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6.3.1 Change
of Control. For the purpose of this Agreement, a
“Change of Control” means the occurrence of any
of the following:
(a) The
acquisition by any individual, entity or group (within the meaning
of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act” )) (a
“Person” ), other than Executive or his
affiliates or Tom L. Ward or his affiliates (the “Exempt
Persons” ), of beneficial ownership (within the meaning
of Rule 13d-3 promulgated under the Exchange Act) of 40% or
more of either (i) the then outstanding shares of common stock
of the Company (the “Outstanding Company Common
Stock” ) or (ii) the combined voting power of the
then outstanding voting securities of the Company entitled to vote
generally in the election of directors (the “Outstanding
Company Voting Securities” ). For purposes of this
paragraph (a) the following acquisitions by a Person will not
constitute a Change of Control: (i) any acquisition directly
from the Company; (ii) any acquisition by the Company;
(iii) any acquisition by any employee benefit plan (or related
trust) sponsored or maintained by the Company or any corporation
controlled by the Company; or (iv) any acquisition by any
corporation pursuant to a transaction which complies with clauses
(i), (ii) and (iii) of paragraph (c) of this
paragraph 6.3.1.
(b) The
individuals who, as of the date hereof, constitute the Board of
Directors (the “Incumbent Board” ) cease for any
reason to constitute at least a majority of the Board of Directors.
Any individual becoming a director subsequent to the date hereof
whose election, or nomination for election by the Company’s
shareholders, is approved by a vote of at least a majority of the
directors then comprising the Incumbent Board will be considered a
member of the Incumbent Board as of the date hereof, but any such
individual whose initial assumption of office occu
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